The Chargeback That Bites Back

Back in May and June of 2022, Kara Smith, who uses the Instagram handle @cannakara bought two items of jewelry from Copper & Co Cannabis Jewelry and then proceeded to file a chargeback with her bank for fraudulent charges for jewelry she never received.

She claims that there was legitimate fraud on the card that was used under a similar name "copper" where they charged $1 and then proceeded to charge $2000. Due to the fraud notice on the account, the bank canceled all transactions under any association with "copper". Consequently, this action also resulted in a chargeback on 2 separate charges for Copper & Co.

The Instagram posts show Kara Smith wearing Christina's jewelry, even though Kara alleges that she never received the jewelry in the chargeback notice that was sent to Christina Norton, the owner of Copper & Co. Cannabis Jewelry.

Christina along with others held a mediation session via Instagram messaging thread with Kara to resolve the issue and work through the complicated process of getting everything cleared up with the bank and reimbursing Copper & Co. Cannabis Jewelry.

Kara allegedly agreed to write a letter stating that there was no fault on Christina's end and to repay the $200 she owed Christina, but the effort she has made has not resulted in resolving the issue. The mediation thread has been going on for over a month with no resolution. This has negatively impacted Christina's small business. because now she can't sell her products through Instagram and the negative actions have resulted in a decline in sales.

Chargebacks hurt small businesses yet there is nothing that can be done. When a customer fraudulently files a chargeback the bank almost always sides on the behalf of their customer because they do not want to risk losing a client. Once that is done the only option for the small business owner to do is to take the customer to small claims court, many times resulting in more money spent than they are out.

Chargeback fraud has a serious effect on businesses and if a business gets "too many" then the merchant will drop the vendor or business altogether.

The only real solution banks do to try to combat these false charges is that if they see their customer doing too many chargebacks they will open an investigation on the customer which could lead to the closure of their account or legal actions.